Labour Party’s ambition to spend £28bn on green initiatives seems unlikely to materialise, according to a source with knowledge of the matter. The plan was announced at the Labour annual conference in 2021, with the party’s shadow chancellor, Rachel Reeves, suggesting that the plan would not be realised until 2027. However, the senior source revealed that it may not be reached at all due to the poor state of public finances. The source emphasised that Labour’s fiscal rules were more important than any policy.
The Conservatives had previously criticised the policy, claiming that extra borrowing could increase interest rates and mortgage costs. At the same time, Reeves had claimed to be the first “green” chancellor, announcing Labour’s Green Prosperity Plan, stating that the money would go towards planting trees, developing batteries and offshore wind farms. The plan was funded by borrowing.
However, Reeves later decided to scale back the Green Prosperity Plan due to the struggling economy. She noted that “economic and fiscal responsibility” was the “rock” upon which the plan must be built. Despite her pledge, doubts within the Labour Party leadership have grown as to whether they will ever meet the £28bn investment goal.
This is due to the party’s fiscal rules, including a commitment to reduce debt within five years, being seen as the “North Star” of the party, with more importance placed on fiscal responsibility than their green initiatives. The Labour Party is determined to be seen as the party of economic responsibility, even if it means tempering their programme for government
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